Banking in China: Once easy, now closed to foreigners

Written by Andrew Henderson
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Dateline: Beijing, China

I touched down in Beijing two days ago and have been busy working on planting some new flags. While the official purpose of my visit is rest-and-relaxation with some friends from my network, I couldn’t pass up the opportunity to check in on some Chinese banks.

For years, opening a bank account in China was one of the easiest things to do. In fact, we discussed the idea as an excellent diversification strategy at my Passport to Freedom conference in 2015.

The process went like this: you showed up at one of the four largest state-owned banks, such as the Agricultural Bank of China, with passport in hand and a Chinese interpreter and they opened an account for you. For years, the account opening requirements were almost nonexistent and among the easiest in the world.

The biggest challenge for most people was getting someone to speak in Chinese, as most bankers at banks such as ICBC and Bank of China didn’t speak much English. However, occasionally you would even get lucky and find someone who spoke enough broken English to handle the process.

While China was and still is just about the worst place to open a bank account or do anything remotely, the process was an easy side project on a trip to Beijing like the one I’m here on now. Fly in for a few days, see the Wall, eat some roast duck, and open a bank account at Bank of China.

No longer.

We frequently discuss the idea that banking and just about every other form of flag-planting is becoming more difficult these days. Countries around the world are tightening the requirements on who their bank opens accounts for us.

In Latvia, one of the most popular destinations for offshore companies to open accounts in the European Union, the central bank is under so much pressure from the US government that banking there has become an exercise in compliance rather than actually doing business.

At least you can still open a bank account in Latvia, but in many other countries, you may not.

Add China to that list.

Last year, the Chinese central bank issued new regulations for all of its banks, particularly state-owned banks. While I’m no fan of governments owning assets that could be privatized, most people here in China strongly believe that the Big Four state-owned banks will never go under. They’re essentially too big to fail.

However, my research team did some checking before my arrival and found that only two banks here – neither of them state-owned – are accepting foreign clients with ease.

No longer can you waltz into a branch here in Beijing with nothing more than ID and get an account. In fact, tourists can no longer open accounts with most banks at all.

That’s a shame because many Chinese banks use the Unionpay system that acts as an alternative to Visa and Mastercard. Unionpay is an excellent non-US alternative if you want to diversify away from the United States and its unsound fiscal policies.

Chinese banks are also about the only way to pay for stuff with WeChat, which is important if you do business in China.

On top of that, China is a strong world power that in and of itself offers excellent jurisdictional diversification.

Now, however, you need to be a resident to open an account. While Hong Kong companies also used to be able to open accounts here, they too are denied by most banks and welcomed only with proof of Mainland business activity at a few others.

I once said that, in the offshore world, “when one door closes, another opens”. And that is still true at times. While China is no longer willing to open accounts for foreigners, I have no doubt that some other country will soon open up its banks to foreigners to fill the gap.

However, banking in China was long a reliable strategy – especially for US citizens – and it’s a shame that the option has largely gone away.

This will not be the last time a country makes its banking rules more strict. In fact, it’s happening all over the world. Even Georgia and Azerbaijan – two of the world’s easiest, and dare I even say lax, places to bank – have tightened up rules on foreign companies opening accounts there.

When Azerbaijan, which gladly accepts any Russian or Iranian that walks up, is telling depositors they won’t accept their business, you know the trend is heading in the wrong direction.

Turkey made similar changes a few years ago and now requires a Turkish tax ID number to open an account as a tourist.

That’s why I frequently discuss the idea of opening bank accounts as “tunnels” with the people I work with personally. There are bank accounts, like those in China circa 2016, that will allow you to bank with them for a minimum deposit as low as $1,000 or even $1 in some cases.

In many cases, once you have an account open, the bank will not close it; they’ll merely stop accepting new accounts from foreigners.

That’s why it can be a great idea to open small accounts now with the understanding that they may be unavailable to you in the future. When I talk about taking action, part of the reason is that flags available for you to plant today will not be available tomorrow.

The worst affected by this will be small depositors who don’t have a lot of cash. Sure, Bank of Singapore recently increased its minimum from $1 million to $2 million, but many of their depositors already met the more stringent requirement.

The person with a mere $1,000 will have fewer and fewer options as time goes on. With greater compliance costs, and with more and more wealthy people from the emerging world, banks don’t have time for some foreigner that doesn’t live there to drop $1,000 into their bank. That customer simply brings too many headaches.

Banking in China as a foreigner has shown that.

There are two angles here: if you are wealthy and can afford to make a large deposit, your options will shrink, but not by nearly as much. I expect more countries to open up to wealthy individuals.

However, if you are a small customer, your options will decrease over time, and the best time to begin diversifying your accounts is now. It feels like every day that I hear about some bank no longer accepting certain types of customers, be it US citizens, or foreign companies, or even tourists.

Andrew Henderson
Last updated: Dec 26, 2019 at 5:32PM

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18 Comments

  1. Dale VMF

    Always insightful, thanks Andrew 🙂

    Reply
    • Irina Loncar

      Thanks Dale!

      Reply
  2. Traveler

    You mentioned “However, my research team did some checking before my arrival and found that only two banks here – neither of them state-owned – are accepting foreign clients with ease.”

    But you didn’t mention which are these 2 banks. I am right now in China, and priv ately owned HSBC said that their minimum requirement is 20000 rmb or more, and publicly owned BOC said ‘cannot open’. So, I was wondering are there still any banks where I can try opening an account as a tourist. Thanks.

    Reply
    • Nicholas

      CBC China Merchants Bank 招商銀行
      I opened a bank account with ease using my passport while on a 60-day tourist visa.

      Reply
      • Darrel

        sorry to ask may i know when your open account in china merchant bank. is it within this year.. course i’m going to china to open a account soon..

        Reply
        • Sandy

          Hi Darrel

          I’m now currently in bkk planning to go either or Qingdao to open a saving account . which place did you open the acc at?

          Reply
      • Clayton

        Hey Nicholas,

        Which branch did you go to and open the account? I’m in Shenzhen right now and haven’t had any luck with Bank of China and ICBC.

        Your response is greatly appreciated! Thank you!

        Reply
  3. Ashi

    I was thinking to close my bank account in china as I no more using it. Such an example, May I know if u open the bank account in kunming can close it in Beijing?

    Reply
  4. Richard Chui

    Can anyone mention what bank will not give you a hard time to open a bank accout with US Passport in China? It is ridiculous that they made it hard, and force us not able to open Alipay. Any tips on how to open a Chinese bank account is appreciated.

    Reply
  5. justin eli

    the good old days are over

    Reply
  6. Carrey

    Hi There,
    I am also currently in Shenzhen on a Tourist visa. For me to extend my visa I need proof of funds in a Chinese Bank account but am being turned away from every bank I have been to so far. My partner managed to open one with his German passport, but the following day, I went to the same bank, and was unable to open one. Every bank I have been to has 100 questions, are very keen to assist me, and then finally come up with some excuse as to why they cannot help me. I have all the correct paper work and documentation, but still not having any luck. Any advice would be great! Thank you!

    Reply
  7. justin

    chinese people dont like to be direct or offend you, so they will make excuses, but what they really want to say is that they dont want to give foreigners accounts. even hongers, and taiwanese have been blacklisted. i even heard from someone that they will no longer allow current foreign customers to make any modifications to their accounts once their original passport expires.

    Reply
  8. elsa

    i guess alot of foreigners have been involved in money laundering, so now the gov is telling banks not to open bank accounts for foreigners. maybe they should make a new kind of bank account that doesnt allow overseas transfers or withdrawls. at least that will allow foreigners to do some domestic transactions

    Reply
  9. Dave

    this is incorrect. you can still open an account if you present copies of signed contracts for the purchase of chinese products, or other business dealings in-country. i follow the youtube channel but this is off …

    Reply
  10. Ian bruce

    I am going to China in the future. Would like to have a bank account to pay hotel, restaurant.ect ECT then after my 90 day stay transfer funds back to the USA. How does this work???

    Reply
  11. C-R

    even for Chinese who become American citizens suddenly are blocked from accessing their accounts in China in Bank of China (online acc). We don’t know if they’re blocking American IP addresses or limiting our activities (we can’t even login, just a blank page on login). There are times when ATM won’t let you withdraw money even, or there may be an invisible ‘limit’ with no fixed amount.

    Reply

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